Since last week, I have been contacted repeatedly by clients, friends and family wanting to know if they qualify for any of the mortgage relief programs that have been signed into law over the past few weeks.

More details have been released by Fannie Mae and Freddie Mac on how they will handle refinance transactions authorized by the Home Affordable Refinance program. The complete details of both programs can be found by accessing the program guides from Fannie Mae and Freddie Mac, but I will point out some of the highlights below to help answer your questions.

Lenders and investors are in a holding pattern as they determine if and when and how they will accept these transactions. Even though this legislation has passed - they are not all required to participate.  In all cases loans will have to be refinanced with the existing owner of the loan today. Meaning, if Fannie Mae is the owner of your loan, the loan must be delivered to Fannie Mae and underwritten according to their guidelines. The same is true for Freddie Mac.

So how do you know if your loan is owned by Fannie or Freddie?

You have the ability to do this by contacting your loan servicer (company that sends you your mortgage statement) and asking...or you can do this by using the links below.  If you need help, I can submit the information for you, simply send me a copy of your current mortgage statement.  Note that your property address must be entered exactly as the agency has it on file, or it may not be found (ie: Rd or Road? St or Street?)

Let's look at the guidelines for both Fannie Mae and Freddie Mac and some of the key factors I see that will impact or enhance your ability to participate. Even though these are some of the highlights, you can also read more detailed guidelines on your own.

One key point to remember is that these are the guides from the Freddie and Fannie. And just as participation in the programs is voluntary, individual lenders and servicers may choose to implement constraints that deviate from the guidelines on their own.


Fannie Mae

Qualifications for a refinance

• You must be receiving either a lower mortgage payment or moving to a more stable type of product like an Adjustable Rate Mortgage to a Fixed-Rate.
  
  
• The maximum loan amount can only be 105% of your homes value.  There is no limitation if you have 2 mortgages but 2nd lien holders will need to re-subordinate and that probably wont be that easy.
  
  
• If mortgage insurance (PMI) does not exist on the loan today, it will not be required on the new loan. If PMI does exist on the loan, the loan will be required to be re-insured and re-qualified through the existing PMI company.
  
  
• The availability for appraisal waivers will exist in limited situations.
  

Applications can be taken now but loan findings may not be available until early April or May but again, each lender may or may not be participating.

Freddie Mac

The Freddie Mac guidelines are somewhat similar to Fannie Mae's, but they are a bit more vague at this time. Although Freddie Mac initially stated that these refinances may ONLY be conducted by the loan servicer or one of their retail channels, I have learned that they are looking at options that could enable more mortgage brokers, like me, to be involved in refinances under this program.

Bottom line - it is still too early to see how this will all play out.  If you are truly in financial hardship then other options might be a better way to go. 

And if you are truly not in financial hardship and you are looking at options just because the value of your home has dropped then most likely you will not qualify for any of these options.  If you HAVE to sell your home, call me to discuss alternative options, there are many.

And if you don't then like many of us, we all get to just sit tight and wait for home values to go up again in the future...and they will.

Additional Resources:

Fannie Mae

Freddie Mac

Does Fannie Mae Own Your Mortgage?

Does Freddie Mac Own Your Mortgage?